In the best year for the freight transportation industry since the Great Recession, logistics managers chalk up efficiencies that drive further U.S. economic growth. However, capacity issues persist, causing shippers to worry about rate hikes as carriers continue to be meticulous in their partnerships.

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While the White House has its sights set on expanding high-speed rail in the U.S., some analysis concludes that in order for HSR to be successful more buy-in is needed from Class I railroads.

A recent report in the Albany, New York Times Union cited officials from CSX as saying that adding passenger trains traveling 110 mph would reduce the amount of freight traffic CSX could handle.

“Each 110 mph Amtrak train displaces six freight trains, CSX Resident Vice President Maurice O’Connell said in the report. He noted that more HSR trains have the potential to throw schedules off and affect deliveries to time-sensitive CSX customers like UPS.

Meanwhile, the concept of HSR continues to gain momentum over the course of 2010 since the White House awarded $8 billion in federal grants from the American Recovery and Reinvestment Act to 31 states and 13 major corridors in the U.S. for high-speed and intercity passenger rail projects.

And even though HSR clearly has the Administration’s backing, Ken Orksi, editor of Innovation Newsbriefs, said in a recent edition that the Federal Railroad Administration’s (FRA) “Stakeholder Agreements,” between state Departments of Transportation and the Class I railroads participating in the HSR program was met with some skepticism by Class I executives.

Under these agreements, said Orski, prospective state grantees are required to sign with Class I railroads whose facilities they intend to use for passenger rail service, with execution of such an agreement (which also involves a service operator, such as Amtrak) being a condition of participating in the capital portion of the HSR program.

Orski added that this directive includes specific quantitative performance measures, stipulating that freight railroads and the grant recipients (in most cases state departments of transportation) agree to “measurable service outcomes” for the number of daily trips, trip time and on-time performance for the proposed passenger rail service. And if a railroad fails to meet those targets, it must “at its sole expense” take all necessary corrective measures to achieve compliance within two months. If failure to achieve the stipulated outcomes continues over the long term, Orski said the railroad must repay a pro-rated share of the federal grant. And to protect the public investment, the FRA is calling for any new capacity created by the federal grant to be reserved for future passenger train use and may not be used to increase freight carrying capacity.

This measure, Orski reported, was met with a “stunned” reaction by Class I executives participating in the HSR program.

While it is clear there are issues to be ironed out in the HSR program, there are myriad benefits of future HSR development for freight railroads and shippers, too.
Some of these benefits include taking trucks off the road, easing highway congestion, and lowering greenhouse gas emissions, according to Association of American Railroads President and CEO Edward R. Hamberger.

In an interview with LM earlier this year, Hamberger said that the $8billion in federal grants show how the White House fully understands that passenger rail cannot be built at the expense of freight rail. As an example, he noted that one aspect of the DOT’s Federal Railroad Administration’s guidelines-for how states should for grants and how grants are awarded-focused on new HSR lines running on a freight railroad right of way.

“The host railroad has to be involved, and there has to be a Memorandum of Understanding (MoU) as to how this would affect freight operations,” said Hamberger.

“There has to be enough capacity for both, and it also has to address liability concerns. My hope is as these get rolled out that there will not be any negative benefit on freight.”

While there is a healthy amount of optimism regarding how freight and passenger railroads can work together in future HSR development in the coming years, Hamberger said the lines of communication between the two need to be open. This, he said, is akin to what already happens on a daily basis between freight and passenger rail operators. And it is more of a matter of coming to an agreement with passenger operators to explain how passenger operations impact capacity and projected needs, which can lead to investments in things like new sidings or trackage.

A leading rail analyst opined that freight rail ultimately will benefit from this investment in HSR.

“Freight railroads benefit from HSR in a subtle but real way,” said Anthony B. Hatch, principal of New York-based ABH Consulting. “This brings benefits to rail suppliers, as well as the idea to view rail as part of a solution is a very good thing. There has also been increased momentum around how railroads can help solve carbon issues, fuel pricing issues, and congestion and safety.”

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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